Slip Op. 19-124 UNITED STATES COURT OF INTERNATIONAL TRADE TOSÇELIK PROFIL VE SAC (1'h675,6,$ùDQG(5%26$1 (5&,<$6%2586$1$<,9(7,&$5(7 A.S., 3ODLQWLIIs, %HIRUH /HR0*RUGRQ-XGJH v. &RQVRO&RXUW1R-00255 UNITED STATES, 'HIHQGDQW, DQG :+($7/$1'78%(&2, 'HIHQGDQW-,QWHUYHQRU OPINION [&RPPHUFH¶V5HPDQG5HVXOWV sXVWDLQHG.] 'DWHG 6HSWHPEHU 20, 2019 'DYLG / 6LPRQ /DZ 2IILFH RI 'DYLG / 6LPRQ RI :DVKLQJWRQ '& IRU 3ODLQWLII 7RVoHOLN3URILOYH6DF(QGVWULVL$ù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³&RPPHUFH´ RI WKH FRXQWHUYDLOLQJGXW\ ³&9'´ RUGHUSXEOLVKHGDV:HOGHG&DUERQ6WHHO3LSHVDQG7XEHV IURP7XUNH\)HG5HJ, 'HS¶WRI&RPPHUFH2FW ILQDOUHVXOWVDGPLQ UHYLHZ ³)LQDO 5HVXOWV´ VHH DOVR DFFRPSDQ\LQJ ,VVXHV DQG 'HFLVLRQ 0HPRUDQGXP C-489- 'HS¶W RI &RPPHUFH 2FW DYDLODEOH DW KWWSV HQIRUFHPHQWWUDGHJRYIUQVXPPDU\WXUNH\-22069-SGI ODVW YLVLWHG WKLV GDWH ³'HFLVLRQ0HPRUDQGXP´ . %HIRUH WKH FRXUW DUH &RPPHUFH¶V )LQDO 5HVXOWV RI 5HGHWHUPLQDWLRQ 3XUVXDQW WR &RXUW5HPDQG ³5HPDQG5HVXOWV´ (&)1R-1, 1 ILOHGSXUVXDQWWRWKHFRXUW¶VUHPDQG RUGHU LQ 7RVoHOLN 3URILO YH 6DF (QGüVWULVL $.ù Y 8QLWHG 6WDWHV, 42 CIT ___, 358 F. 6XSS G ³(UERVDQ ,´ 2 7KH FRXUW UHPDQGHG WKH )LQDO 5HVXOWV IRU &RPPHUFH WRDGGUHVV ZKHWKHU &RQVROLGDWHG 3ODLQWLII (UERVDQ (UFL\DV %RUX 6DQD\L YH 7LFDUHW$6¶V ³(UERVDQ´ NQRZOHGJHRI86HQWULHVRILWVFLUFXODU ZHOGHGFDUERQVWHHO SLSHVDQGWXEHV ³VXEMHFWPHUFKDQGLVH´ LVUHOHYDQWLQGHWHUPLQLQJZKHWKHU(UERVDQPD\ TXDOLI\ IRUDQRVKLSPHQWFHUWLILFDWLRQ(UERVDQ,&,7DW___)6XSS. GDW 1 $OOFLWDWLRQVWRWKH5HPDQG5HVXOWVWKHDJHQF\UHFRUGDQGWKHSDUWLHV¶EULHIVDUHWR WKHLUFRQILGHQWLDOYHUVLRQVXQOHVVRWKHUZLVHQRWHG 27KHFRXUWVXVWDLQHGWKH)LQDO5HVXOWV DVWRDOOLVVXHVUDLVHGE\7RVoHOLNSee (UERVDQ I, &,7 DW BBB ) 6XSS G DW 7RVoHOLN GLG QRW ILOH DQ\ FRPPHQWV RQ WKH 5HPDQG 5HVXOWV. See 7RVoHOLN 1RWLILFDWLRQ 5HJDUGLQJ &RPPHQWV RQ 5HPDQG ECF 1R 55. &RQVRO&RXUW1R-00255 3DJH3 7KH FRXUWKDVMXULVGLFWLRQSXUVXDQWWR6HFWLRQ$ D % LLL RIWKH7DULII$FWRI DVDPHQGHG 86&D D % LLL 3 DQG86& F I. Background ,QWKHDGPLQLVWUDWLYHUHYLHZ(UERVDQDUJXHGWKDW&RPPHUFHVKRXOGUHVFLQG WKH SURFHHGLQJ SXUVXDQWWR &.F.R. § G DVWR(UERVDQEHFDXVHLWGLGQRWKDYH DQ\UHYLHZDEOHVKLSPHQWVGXULQJWKHSHULRGRIUHYLHZ ³POR´ . See 5HPDQG5HVXOWV DW 2 VHHDOVR 19 C.F.R. § G ³>&RPPHUFH@PD\UHVFLQGDQDGPLQLVWUDWLYHUHYLHZ LQZKROHRURQO\ZLWKUHVSHFWWRDSDUWLFXODUH[SRUWHURUSURGXFHULI>&RPPHUFH@FRQFOXGHV WKDWGXULQJWKHSHULRGFRYHUHGE\WKHUHYLHZWKHUHZHUHQRHQWULHVH[SRUWVRUVDOHVRI WKH VXEMHFW PHUFKDQGLVH DV WKH FDVH PD\ EH.´ &RPPHUFH GHQLHG (UERVDQ¶V QR VKLSPHQWFHUWLILFDWLRQEDVHGRQLQIRUPDWLRQUHFHLYHGIURP86&XVWRPVDQG%RUGHU 3URWHFWLRQ ³&%3´ HVWDEOLVKLQJWKDW(UERVDQ¶VVXEMHFWPHUFKDQGLVHGLGLQIDFWHQWHUWKH 8QLWHG6WDWHVGXULQJWKH325&RPPHUFHIRXQGWKDWWKHUHZHUHUHYLHZDEOHHQWULHVRIWKH VXEMHFW PHUFKDQGLVH WKDW SUHFOXGHG (UERVDQ IURP EHLQJ HOLJLEOH IRU D QR VKLSPHQW FHUWLILFDWLRQ5HPDQG5HVXOWV DW3. $VDUHVXOW&RPPHUFHDVVLJQHG (UERVDQWKH³QRQ- VHOHFWHG [CVD] UDWH´ RI ,G DW (UERVDQ VXEVHTXHQWO\ DSSHDOHG &RPPHUFH¶V GHWHUPLQDWLRQ. See (UERVDQ,, 42 CIT DW BBB)6XSSGDW. 7KH FRXUW SUHYLRXVO\ KHOG WKDW &RPPHUFH UHDVRQDEO\ IRXQG WKDW WKHUH ZHUH UHYLHZDEOH HQWULHV RI VXEMHFW PHUFKDQGLVH LQWR WKH 86 RULJLQDWLQJ IURP (UERVDQ. +RZHYHUWKHFRXUW FRQFOXGHGWKDW&RPPHUFH IDLOHGWRDGGUHVV(UERVDQ¶VFRQWHQWLRQWKDW 3)XUWKHUFLWDWLRQVWRWKH7DULII$FWRI DVDPHQGHGDUHWRWKHUHOHYDQWSURYLVLRQVRI 7LWOH RIWKH86&RGHHGLWLRQ &RQVRO&RXUW1R-00255 3DJH4 LWGLGQRWNQRZRUKDYHUHDVRQWRNQRZRIDQ\WUDQVVKLSPHQWVRIVXEMHFWPHUFKDQGLVHWR WKH 8QLWHG 6WDWHV GXULQJ WKH 325. See iG 42 CIT DW BBB ) 6XSS G DW . $FFRUGLQJO\WKHFRXUW UHPDQGHGWKHDFWLRQWR &RPPHUFHWRGHWHUPLQH ZKHWKHU (UERVDQ¶V FODLPHG ODFNRINQRZOHGJHLVUHOHYDQWLQWKH&9'FRQWH[WDQGPRUHVSHFLILFDOO\ ZKHWKHU NQRZOHGJH LV UHOHYDQW ZLWK UHVSHFW WR &RPPHUFH¶V FRQVLGHUDWLRQ RI D QR VKLSPHQW FHUWLILFDWLRQXQGHU9 C.F.R. § G ,G 42 CIT DW BBB)6XSSGDW. 2Q UHPDQG &RPPHUFH e[SODLQHG WKDW NQRZOHGJH RI 86 HQWULHV RQ WKH SDUW RI (UERVDQ³LVQRWDQHFHVVDU\FRQGLWLRQ´ IRUGHWHUPLQLQJZKHWKHU(UERVDQKDGUHYLHZDEOH HQWULHV GXULQJ WKH 325. See 5HPDQG 5HVXOWV DW &RQILUPLQJ WKDW (UERVDQ KDG UHYLHZDEOHHQWULHVGXULQJWKH325&RPPHUFHDJDLQUHIXVHGWRUHVFLQGWKHDGPLQLVWUDWLYH UHYLHZDVWR(UERVDQDQG FRQWLQXHGWRDVVLJQ(UERVDQWKH³QRQ-VHOHFWHG[CVD] UDWH´ RI ,G DW10–11. ,Q FKDOOHQJLQJ WKH 5HPDQG 5HVXOWV (UERVDQ PDLQWDLQV WKDW &RPPHUFH PXVW FRQVLGHU (UERVDQ¶V DSSDUHQW ODFN RI NQRZOHGJH UHJDUGLQJ WKH 86 HQWULHV RI VXEMHFW PHUFKDQGLVH LQ HYDOXDWLQJ LWV HOLJLELOLW\ IRU D QR VKLSPHQW FHUWLILFDWLRQ. 6HH JHQHUDOO\ 3O¶V &RPPHQWVRQ)LQDO5HVXOWVRI5HGHWHUPLQDWLRQ3XUVXDQWWR5HPDQG(&)1R ³3O¶V&PWV.´ VHHDOVR 'HI¶V5HSO\WR&RPPHQWVRQWKH5HPDQG5HGHWHUPLQDWLRQ(&) 1R 'HI-,QWHUYHQRU:KHDWODQG7XEH&R¶V5HVSRQVLYH&RPPHQWVRQWKH5HPDQG 5HGHWHUPLQDWLRQ(&)1R )RUWKHUHDVRQVWKDWIROORZWKHFRXUWVXVWDLQVWKH5HPDQG 5HVXOWV. &RQVRO&RXUW1R-00255 3DJH5 II. Standard of Review 7KHFRXUWVXVWDLQV&RPPHUFH¶V³GHWHUPLQDWLRQVILQGLQJVRUFRQFOXVLRQV´XQOHVV WKH\ DUH ³XQVXSSRUWHG E\ VXEVWDQWLDO HYLGHQFH RQ WKH UHFRUG RU RWKHUZLVH QRW LQ DFFRUGDQFHZLWKODZ´ 86&D E % L 0RUHVSHFLILFDOO\ZKHQUHYLHZLQJ DJHQF\ GHWHUPLQDWLRQV ILQGLQJV RU FRQFOXVLRQV IRU VXEVWDQWLDO HYLGHQFH WKH FRXUW DVVHVVHVZKHWKHUWKHDJHQF\DFWLRQLVUHDVRQDEOHJLYHQWKHUHFRUGDVDZKROH1LSSRQ 6WHHO &RUS Y 8QLWHG 6WDWHV )G 45, 1350– )HG &LU 6XEVWDQWLDO HYLGHQFH KDV EHHQGHVFULEHG DV ³VXFK UHOHYDQW HYLGHQFHDV D UHDVRQDEOH PLQG PLJKW DFFHSWDVDGHTXDWHWRVXSSRUWDFRQFOXVLRQ´'X3RQW7HLMLQ)LOPV86$Y8QLWHG6WDWHV, )G )HG&LU TXRWLQJ &RQVRO(GLVRQ&RY1/5%, 305 U.S. 6XEVWDQWLDOHYLGHQFHKDVIXUWKHUEHHQGHVFULEHGDV³VRPHWKLQJOHVV WKDQ WKH ZHLJKW RI WKH HYLGHQFH DQG WKH SRVVLELOLW\ RI GUDZLQJ WZR LQFRQVLVWHQW FRQFOXVLRQVIURPWKHHYLGHQFHGRHVQRWSUHYHQWDQDGPLQLVWUDWLYHDJHQF\¶VILQGLQJIURP EHLQJVXSSRUWHGE\VXEVWDQWLDOHYLGHQFH´&RQVRORY)HG0DU&RPP¶Q86 )XQGDPHQWDOO\³VXEVWDQWLDOHYLGHQFH´LVEHVWXQGHUVWRRGDVDZRUGIRUPXOD FRQQRWLQJ UHDVRQDEOHQHVV UHYLHZ &KDUOHV + .RFK -U $GPLQLVWUDWLYH /DZ DQG 3UDFWLFH >@ GHG 7KHUHIRUHZKHQDGGUHVVLQJDVXEVWDQWLDOHYLGHQFHLVVXH UDLVHG E\ D SDUW\ WKH FRXUW DQDO\]HV ZKHWKHU WKH FKDOOHQJHG DJHQF\ DFWLRQ ³ZDV UHDVRQDEOH JLYHQ WKH FLUFXPVWDQFHV SUHVHQWHG E\ WKH ZKROH UHFRUG´ $ :HVW¶V )HG )RUPV1DWLRQDO&RXUWV WKHG 6HSDUDWHO\WKHWZR-VWHSIUDPHZRUNSURYLGHGLQ&KHYURQ86$,QFY1DWXUDO 5HV 'HI &RXQFLO ,QF 86 – 1984 JRYHUQV MXGLFLDO UHYLHZ RI &RQVRO&RXUW1R-00255 3DJH6 &RPPHUFH¶VLQWHUSUHWDWLRQRIWKHFRXQWHUYDLOLQJGXW\VWDWXWHSee 8QLWHG6WDWHVY(XURGLI S.A.86 &RPPHUFH¶V³LQWHUSUHWDWLRQJRYHUQVLQWKHDEVHQFHRI XQDPELJXRXVVWDWXWRU\ODQJXDJHWRWKHFRQWUDU\RUXQUHDVRQDEOHUHVROXWLRQRIODQJXDJH WKDWLVDPELJXRXV´ III. Discussion (UERVDQFKDOOHQJHVWKHGHQLDORILWVUHTXHVWHGQRVKLSPHQWFHUWLILFDWLRQRQ PXOWLSOH JURXQGV ,W FRQWHQGV WKDW &RPPHUFH¶V ILQGLQJ WKDW (UERVDQ KDG UHYLHZDEOH HQWULHV RI VXEMHFWPHUFKDQGLVHGXULQJWKH325 ³GHVSLWH(UERVDQ¶VODFNRINQRZOHGJHWKDWVDOHVWR DIRUHLJQWKLUGSDUW\ZHUHXOWLPDWHO\VKLSSHGWRWKH8QLWHG6WDWHV,´is ³FRQWUDU\WRWKHSODLQ ODQJXDJHDQGLQWHQWRIWKHVWDWXWH´3O¶V&PWVDW– FLWLQJ 86& . (UERVDQ IXUWKHUDUJXHVWKDW &RPPHUFHLVUHTXLUHGWRFRQGXFWD³SDVV-WKURXJK´DQDO\VLVLQPDNLQJ LWVQRVKLSPHQWFHUWLILFDWLRQDQGWKDW&RPPHUFHPXVW³GHWHUPLQHWKDWDSHUVRQUHFHLYHG ERWKDILQDQFLDOFRQWULEXWLRQDQGDEHQHILWZLWK UHJDUGWRWKH86VDOHVEHLQJUHYLHZHG´ ,G DW –10. (UERVDQODVWO\PDLQWDLQV WKDW&RPPHUFH¶V)HGHUDO5HJLVWHUQRWLFHVLQSULRU &9'SURFHHGLQJVGHPRQVWUDWHWKDW&RPPHUFHKDV UHFRJQL]HGWKDWWKHNQRZOHGJHWHVW VKRXOGEH XVHG LQWKH&9'FRQWH[W See LG DW FLWLQJ$OXPLQXP([WUXVLRQVIURPWKH 3HRSOH¶V5HSXEOLFRI&KLQD, 80 )HG5HJ,, 'HS¶WRI&RPPHUFH'HF ILQDO UHVXOWV DQG SDUWLDO UHVFLVVLRQ RI DGPLQ UHY ³$OXPLQXP ([WUXVLRQV IURP &KLQD´ DQG 0XOWLOD\HUHG:RRG)ORRULQJIURPWKH3HRSOH¶V5HSXEOLFRI&KLQD)HG &RQVRO&RXUW1R-00255 3DJH 5HJ , , 'HS¶W RI &RPPHUFH -XQH ILQDO UHVXOWV DQG SDUWLDO UHVFLVVLRQRIDGPLQUHY ³:RRG)ORRULQJIURP&KLQD´ (UERVDQ LQLWLDOO\ FRQWHQGV WKDW 86& UHTXLUHV&RPPHUFHWR FRQVLGHU D UHVSRQGHQW¶V NQRZOHGJH LQ GHWHUPLQLQJ ZKHWKHU WR LPSRVH D FRXQWHUYDLOLQJ GXW\, LQFOXGLQJLQHYDOXDWLQJD UHVSRQGHQW¶V UHTXHVWIRUDQRVKLSPHQWFHUWLILFDWLRQ. 6SHFLILFDOO\ (UERVDQ DUJXHs WKDW WKH SKUDVH ³OLNHO\ WR EH VROG´ LQ D FRQQRWHV WKDW &RPPHUFH PXVW XVH D NQRZOHGJH WHVW LQ GHWHUPLQLQJ ZKHWKHU WR UHVFLQG DQ DGPLQLVWUDWLYHUHYLHZXQGHU 19 C.F.R. § G 3O¶V&PWVDW (UERVDQ WKHUHIRUH PDLQWDLQV WKDW &RPPHUFH VKRXOG KDYH JUDQWHG (UERVDQ D QR VKLSPHQW FHUWLILFDWLRQ EHFDXVHLWV VXEMHFW PHUFKDQGLVHZDVQRW NQRZLQJO\ LPSRUWHGVROGRUOLNHO\WREHVROG LQWRWKHU.S. DWWKHWLPHRILWVVDOH. ,G (UERVDQKRZHYHU GRHVQRWH[SODLQ KRZ D ¶VXVHRIWKHSKUDVH³OLNHO\ WREHVROG´FDQEHUHDGWRUHTXLUHWKDW&RPPHUFHXVH DNQRZOHGJHWHVW LQLWVQRVKLSPHQW FHUWLILFDWLRQDQDO\VLV. 'HVSLWH(UERVDQ¶VFRQWHQWLRQVQHLWKHU19 U.S.C. § D QRU 19 C.F.R. § G XQDPELJXRXVO\UHTXLUHNQRZOHGJH0RUHRYHU(UERVDQGRHV QRWSURYLGHDQ\OHJDOEDVLVIRULWVDUJXPHQWWKDW&RPPHUFHPXVWXVHWKHNQRZOHGJHWHVW LQ FRQVLGHULQJ D UHVSRQGHQW¶V HOLJLELOLW\ IRU D QR VKLSPHQW FHUWLILFDWLRQ &RQWUDU\ WR (UERVDQ¶V QDNHG FRQWHQWLRQV &RPPHUFH SURYLGHV D GHWDLOHG H[SODQDWLRQ DV WR ZK\ NQRZOHGJHLVUHOHYDQWLQLWVDSSOLFDWLRQ RIWKHDQWLGXPSLQJ ³AD´ GXW\ VWDWXWHDQGZK\ NQRZOHGJH LV OLNHZLVH QRW UHOHYDQW LQ WKH &9' FRQWH[W See 5HPDQG 5HVXOWV DW –10. &RPPHUFHVSHFLILFDOO\QRWHVWKDW ³(UERVDQ FLWHVWR &)5EXWKDVQRWLGHQWLILHG DQ\ VSHFLILF ODQJXDJH LQ WKDW UHJXODWLRQ WR VXSSRUW LWV FRQWHQWLRQ ZLWK UHVSHFW WR &9' &RQVRO&RXUW1R-00255 3DJH8 DGPLQLVWUDWLYH UHYLHZV´ 5HPDQG 5HVXOWV DW *LYHQ WKH ODFN RI UHIHUHQFH WR D SURGXFHU¶V NQRZOHGJH LQ HLWKHU WKH &9' VWDWXWH RU LQ WKH VSHFLILF UHJXODWLRQ DW LVVXH 19 C.F.R. § 351.213 G &RPPHUFHUHDVRQDEO\FRQFOXGHs WKDWWKH&9'VWDWXWHDQG WKHDSSOLFDEOHUHJXODWLRQGRQRWUHTXLUH&RPPHUFHWRXVHD NQRZOHGJHWHVW LQHYDOXDWLQJ (UERVDQ¶V QR VKLSPHQW FHUWLILFDWLRQ UHTXHVW. See LG &RPPHUFH IXUWKHU H[SODLQHG WKDW XQOLNHLWVGHWHUPLQDWLRQVLQWKHA'GXW\FRQWH[WNQRZOHGJHLVQRWUHOHYDQW EHFDXVHWKH IRFXVLQWKH&9'FRQWH[WLV ³RQLPSRUWVRIPHUFKDQGLVHWKDWEHQHILWIURPFRXQWHUYDLODEOH VXEVLGLHV´ ,G DW &RPPHUFH WKHUHIRUH UHDVRQDEO\ FRQFOXGHG WKDW ³>W@KH NQRZOHGJH WHVW LV LQDSSOLFDEOH LQ WKH FRQWH[W RI &9' SURFHHGLQJV EHFDXVH &RPPHUFH GRHV QRW H[DPLQHDSURGXFHU¶VVHOOLQJSUDFWLFHVDQGWKXVKDVQRQHHGWRGHWHUPLQHWKHLGHQWLW\ RIWKHSULFHGLVFULPLQDWRULQVXFKSURFHHGLQJV´,G (UERVDQ QH[W FRQWHQGV WKDW &RPPHUFH LV UHTXLUHG WR FRQGXFW D ³SDVV-WKURXJK DQDO\VLV´ WRGHWHUPLQHZKHWKHUWKHVXEVLG\ JUDQWHGWR(UERVDQ DVDSURGXFHURIVXEMHFW PHUFKDQGLVH ³SDVVHGWKURXJK´ WRDWKLUG-SDUW\ VKLSSHUUHVHOOHU. See 3O¶V&PWVDW–10. (UERVDQUHOLHV RQ 19 U.S& % GHILQLQJDFRXQWHUYDLODEOHVXEVLG\ DQG WKH GHFLVLRQs LQ 'HOYHUGH6U/Y8QLWHG6WDWHV)G )HG&LU DQG $OOHJKHQ\ /XGOXP&RUS Y8QLWHG6WDWHV&,7)6XSSG , IRUWKHSURSRVLWLRQ WKDWDEVHQWDVKRZLQJRINQRZOHGJHRQWKHSDUWRIWKHUHVSRQGHQW&RPPHUFHLVUHTXLUHG WRSUHVXPHWKDWWKHFRXQWHUYDLODEOHVXEVLG\LV³GHHPHGWREHH[WLQJXLVKHG´DIWHUDVDOH E\WKHVXEVLGL]HGH[SRUWHUSURGXFHUWRDWKLUG-SDUW\,G (UERVDQ¶V UHOLDQFH RQ 'HOYHUGH DQG $OOHJKHQ\ /XGOXP &RUS LV PLVSODFHG $OOHJKHQ\/XGOXP&RUS GHDOWZLWKZKHWKHUQRQ-UHFXUULQJILQDQFLDOEHQHILWV, UHFHLYHGE\ &RQVRO&RXUW1R-00255 3DJH9 DSUHYLRXVO\SXEOLFHQWLW\, VXUYLYHSULYDWL]DWLRQ, DQGZKHWKHUWKHSULYDWHQHZRZQHUVDUH VXEMHFW WR FRXQWHUYDLOLQJ GXWLHV RQ SURGXFWV WKH\ H[SRUW WR WKH 8QLWHG 6WDWHV See $OOHJKHQ\/XGOXP&RUS&,7DW)6XSSGDW 'HOYHUGH IRFXVHGRQWKH TXHVWLRQRIZKHWKHUDIRUPHURZQHU¶VUHFHLSWRIVXEVLGLHVFRXOGEHSUHVXPHGWR³SDVV WKURXJK´DWUDQVIHURIFRUSRUDWHDVVHWV DQGEHDWWULEXWHG WRDQHZFRUSRUDWHRZQHUSee 'HOYHUGH )G DW 1363–64. &RPPHUFH¶V GHQLDO RI (UERVDQ¶V QR VKLSPHQW FHUWLILFDWLRQ is GLVWLQJXLVKDEOH IURP WKH GLIIHUHQW LVVXHV DGGUHVVHG LQ 'HOYHUGH DQG $OOHJKHQ\ /XGOXP &RUS As &RPPHUFH H[SODLQHG WKRVH FDVHV LQYROYHG ³>D@WWULEXWLRQ LVVXHV VWHPPLQJ IURP FKDQJHV LQ RZQHUVKLS,´ DQG WKH\ DUH ³GLVWLQFW IURP ZKHWKHU D SDUWLFXODUSURGXFHUKDGUHYLHZDEOHHQWULHVGXULQJWKH POR.´See 5HPDQG5HVXOWV DW (UERVDQ DOVR UHOLHV RQ 19 U.S.C. % WR DUJXH WKDW LI D VXEVLGL]HG SURGXFHUH[SRUWHUODFNV NQRZOHGJH WKDWVXEMHFWPHUFKDQGLVH ZLOOHQWHU WKe 8QLWHG6WDWHV &RPPHUFH PXVW GHHP WKH FRXQWHUYDLODEOH VXEVLG\ H[WLQJXLVKHG RQFH WKH VXEMHFW PHUFKDQGLVHLVVROGWRDWKLUGSDUW\DEVHQWDSDVV-WKURXJKDQDO\VLV. See 3O¶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es QRUPDOO\IROORZHGE\JRYHUQPHQWV &RQVRO&RXUW1R-00255 3DJH10 86& % TKLV ODQJXDJH GRHV QRW UHIHU WR D ³SDVV-WKURXJK DQDO\VLV.´ (UERVDQQHYHUWKHOHVVPDLQWDLQVWKDW LILWGLGQRWNQRZWKDWWKHVXEMHFWPHUFKDQGLVH ZDV XOWLPDWHO\GHVWLQHGIRUWKH8QLWHG6WDWHV, ³&RPPHUFHPXVWSUHVXPH WKDWVXEVLGLHVZHUH H[WLQJXLVKHG XSRQ WKH DUPV-OHQJWK VDOH WR WKH LQGHSHQGHQW HQWLW\.´ 3O¶V &PWV DW HPSKDVLVDGGHG . &RPPHUFHUHDVRQDEO\DGGUHVVHGWKLVDUJXPHQW (UERVDQ DJDLQ PLVLQWHUSUHWV KRZ &RPPHUFH WUHDWV PHUFKDQGLVHH[SRUWHGWRWKH8QLWHG6WDWHVE\QRQ-SURGXFLQJ HQWLWLHVLQ&9'SURFHHGLQJV&RQWUDU\WR(UERVDQ¶VDUJXPHQW D SDVV-WKURXJK DQDO\VLV ZRXOG EH LQDSSOLFDEOH WR HQWULHV RI VXEMHFWPHUFKDQGLVHSURGXFHGE\(UERVDQDQGH[SRUWHGE\D WUDGLQJ FRPSDQ\ &RPPHUFH¶V UHJXODWLRQ DW &)5 F SURYLGHVWKDW³EHQHILWVIURPVXEVLGLHV SURYLGHGWR DWUDGLQJFRPSDQ\ZKLFKH[SRUWVVXEMHFWPHUFKDQGLVHVKDOO EHFXPXODWHG ZLWK EHQHILWVIURPVXEVLGLHVSURYLGHGWRWKHILUP ZKLFKLVSURGXFLQJVXEMHFWPHUFKDQGLVHWKDWLVVROG WKURXJK WKH WUDGLQJ FRPSDQ\ UHJDUGOHVV RI ZKHWKHU WKH WUDGLQJ FRPSDQ\ DQG WKH SURGXFLQJ ILUP DUH DIILOLDWHG´ HPSKDVLV DGGHG $V FOHDUO\ VWDWHG VXEMHFW PHUFKDQGLVH H[SRUWHG E\ WKHWUDGLQJ FRPSDQ\LVGHHPHGWREHQHILWIURPWKHVXEVLGLHV SURYLGHGWRERWKWKHWUDGLQJFRPSDQ\DQGWKH SURGXFHURIWKH PHUFKDQGLVH 5HPDQG5HVXOWV DW(UERVDQIDLOVWRH[SODLQKRZLWV ODFNRINQRZOHGJHRI D WKLUG-SDUW\¶V LQWHQWLRQ WR VHOO VXEMHFW PHUFKDQGLVH LQ WKH 8QLWHG 6WDWHV VRPHKRZ H[WLQJXLVKes WKH FRPSHWLWLYHEHQHILW(UERVDQREWDLQHGIURPWKHPHUFKDQGLVH¶VVXEVLGL]DWLRQ. $FFRUGLQJO\, WKH FRXUW FRQFOXGHV WKDW (UERVDQ¶V UHOLDQFHRQ % , 'HOYHUGH, DQG AOOHJKHQ\ /XGOXP&RUS LVPLVSODFHG1HLWKHUWKHVWDWXWH, QRU'HOYHUGH, QRU $OOHJKHQ\/XGOXP&RUS UHTXLUH&RPPHUFHWRPDNHVXFKSUHVXPSWLRQVRUWRFRQGXFWD³SDVV-WKURXJK´DQDO\VLV &RQVRO&RXUW1R-00255 3DJH11 RQWUDQVDFWLRQVEHWZHHQDSURGXFHUH[SRUWHURIVXEVLGL]HGPHUFKDQGLVHDQGD WKLUG-SDUW\ VKLSSHUUHVHOOHU $OWHUQDWLYHO\(UERVDQDSSHDUVWRDUJXHWKDWHYHQLILWGLGKDYHNQRZOHGJH RIDQ\ WUDQVVKLSPHQWV RI LWV VXEMHFW PHUFKDQGLVH &RPPHUFH ZDs VRPHKRZ VWLOO REOLJDWHG WR SHUIRUPDSDVV-WKURXJKDQDO\VLVWRGHWHUPLQHZKHWKHUWKHVXEVLG\SDVVHGWKURXJKWRWKH WKLUG-SDUW\ See 3O¶V&PWVDW ³(YHQLI(UERVDQKDGNQRZOHGJHRIWKH86GHVWLQDWLRQ RILWVSURGXFWVDSDVV-WKURXJKDQDO\VLVLVQRQHWKHOHVVUHTXLUHG«.´ LG DW ³,I(UERVDQ GLGKDYHNQRZOHGJHWKDWWKHVKLSPHQWVZHUHXOWLPDWHO\GHVWLQHGIRUWKH8QLWHG6WDWHV WKHQ&RPPHUFHPXVWWDNHWKHIXUWKHUVWHSRIFRQGXFWLQJDSDVV-WKURXJKDQDO\VLV«.´ . 7R WKH H[WHQW WKDW (UERVDQ is QRZ VXJJHVWLQJ WKDW LW VKRXOG TXDOLI\ IRU D QR VKLSPHQW FHUWLILFDWLRQHYHQLILWNQRZLQJO\PDGHVDOHVRIVXEMHFWPHUFKDQGLVHWRWKH8QLWHG6WDWHV GXULQJWKH325, (UERVDQKDVZDLYHGWKLVDUJXPHQW See 'RUEHVW/WGY8QLWHG6WDWHV, )G– )HG&LU DIILUPLQJZDLYHURIDUJXPHQWVQRWUDLVHGXQWLO DIWHUUHPDQG )LQDOO\(UERVDQFRQWHQGVWKDW&RPPHUFH¶V)HGHUDO5HJLVWHUQRWLFHVLQSULRU CVD SURFHHGLQJVVXSSRUWWKHDSSOLFDWLRQRIDNQRZOHGJHWHVW3O¶V&PWVDW(UERVDQUHOLHV RQ &RPPHUFH¶VGHWHUPLQDWLRQVLQ $OXPLQXP([WUXVLRQVIURP&KLQD DQG:RRG)ORRULQJ IURP &KLQD, DUJXLQJ WKDW WKHVH DGPLQLVWUDWLYH UHYLHZV ZHUH UHVFLQGHG EDVHG RQ CRPPHUFH¶VILQGLQJVWKDWWKHVHFRPSDQLHVPDGHQRVKLSPHQWVWRWKH8QLWHG6WDWHV LQ WKHLU UHVSHFWLYH 325V. ,G DW (UERVDQ FRQWHQGV WKDW ³&RPPHUFH¶V RZQ ODQJXDJH VXSSRUWVDNQRZOHGJHWHVWIRU86VDOHVLQ&9'SURFHHGLQJVLQWKDW&RPPHUFHWLHVWKH UHYLHZHGFRPSDQ\¶VDFWLRQVWRVKLSPHQWVWRWKH8QLWHG6WDWHV´,G (UERVDQDJDLQDUJXHV &RQVRO&RXUW1R-00255 3DJH12 WKDW &RPPHUFH PXVW GHWHUPLQH ³ZKHWKHU WKH SURGXFHU KDG NQRZOHGJH RI >VXEVHTXHQW WKLUG-SDUW\VDOHVRILWVPHUFKDQGLVHWRWKH8QLWHG6WDWHV@´DQGPDLQWDLQVWKDWZLWKRXWDQ DJHQF\GHWHUPLQDWLRQDVWRZKHWKHUDSURGXFHUKDGWKDWUHTXLVLWHNQRZOHGJH ³&RPPHUFH FDQQRW DVVXPH WKDW VXEVLGLHV ZHUH SDVVHG WKURXJK WR WKH H[SRUWHU RI VXEMHFW PHUFKDQGLVH.´ 3O¶V&PWVDW FLWLQJ19 U.S.C. § % . %H\RQGLWVQDNHGFLWDWLRQ WR19 U.S.C. § % (UERVDQDJDLQIDLOVWRSURYLGHDQ\ SHUVXDVLYHUHDVRQLQJWKDW &RPPHUFHPXVWXVHDNQRZOHGJHWHVWRUFRQGXFWD³SDVV-WKURXJKDQDO\VLV´LQDSSO\LQJ 19 C.F.R. § G . (UERVDQ DOVR PLVDSSUHKHQGV &RPPHUFH¶V SULRU GHWHUPLQDWLRQV LQ $OXPLQXP ([WUXVLRQV IURP &KLQD DQG :RRG )ORRULQJ IURP &KLQD. $V &RPPHUFH H[SODLQHG LWV DSSURDFK LQFRQGXFWLQJ³QRVKLSPHQW´LQTXLULHVLVWRFRQILUPZLWK&%3 ³ZKHWKHUVXEMHFW PHUFKDQGLVH SURGXFHG DQGRU H[SRUWHG E\ [WKH UHVSRQGHQW VHHNLQJ D QR VKLSPHQW FHUWLILFDWLRQ] ZDVLPSRUWHGLQWRWKH8QLWHG6WDWHVGXULQJWKH325´5HPDQG5HVXOWV DW H[SODLQLQJ WKDW &RPPHUFH GRHV QRW VHHN WR FRQILUP ZKDW FRPSDQ\ LV ³GLUHFWO\ UHVSRQVLEOHIRUVKLSSLQJVXEMHFWPHUFKDQGLVH´ . $V&RPPHUFHH[SODLQHG &RPPHUFH¶V DSSURDFK LQ WKH UHYLHZ DW LVVXH LV WKH VDPH DSSURDFK LW XQGHUWRRN LQ $OXPLQXP ([WUXVLRQV IURP &KLQD LQ ZKLFK &RPPHUFH H[SODLQHG WKDW LW LVVXHG LWV ³QR- VKLSPHQWV´ PHVVDJH 6SHFLILFDOO\ LQ WKDW FDVH &RPPHUFH LQTXLUHG ZLWK &%3 DV WR ZKHWKHU DOXPLQXP H[WUXVLRQV IURP &KLQDKDGEHHQ³SURGXFHGDQGRUH[SRUWHG´E\ILUPVDWLVVXH :H DOVR QRWH WKDW &RPPHUFH UHVFLQGHG WKH DGPLQLVWUDWLYH UHYLHZ ZLWK UHVSHFW WR WKH QR-VKLSPHQW FRPSDQLHV LQ $OXPLQXP ([WUXVLRQV IURP &KLQD EHFDXVH DOO UHTXHVWV WR UHYLHZWKRVHFRPSDQLHVZHUHWLPHO\ZLWKGUDZQ6LPLODUO\LQ :RRG )ORRULQJ IURP &KLQD &RPPHUFH¶V ³QR VKLSPHQW´ PHVVDJHWR&%3LQTXLUHGZKHWKHUZRRGIORRULQJIURP&KLQD KDG EHHQ ³SURGXFHG DQGRU H[SRUWHG´ E\ WKH ILUPV DW LVVXH &RQVRO&RXUW1R-00255 3DJH13 7KXV &RPPHUFH¶V DSSURDFK LQ $OXPLQXP ([WUXVLRQV IURP &KLQD DQG:RRG)ORRULQJIURP&KLQD GRHVQRWVWDQGIRUWKH SURSRVLWLRQWKDWLQ&9'UHYLHZV&RPPHUFHGHWHUPLQHVQRQ- VKLSPHQW EDVHG RQ ZKHWKHU D FRPSDQ\ ZDV GLUHFWO\ UHVSRQVLEOH IRU VKLSSLQJ VXEMHFW PHUFKDQGLVH WR WKH 8QLWHG 6WDWHV ,G DW –20. &RPPHUFH¶V H[SODQDWLRQ UHDVRQDEO\ GHVFULEHV ZK\ LWV QR VKLSPHQW FHUWLILFDWLRQ DQDO\VLV XQGHU § G IRFXVHV REMHFWLYHO\ RQ FRQILUPLQJ WKDW WKH VXEVLGL]HG PHUFKDQGLVH HQWHUHG WKH 8QLWHG 6WDWHV GXULQJ WKH 325, UDWKHU WKDQ RQ ZKHWKHU WKH H[SRUWHU RU SURGXFHU XQGHU UHYLHZ KDG VXEMHFWLYH NQRZOHGJH RI WKH UHYLHZDEOH HQWULHVRILWVPHUFKDQGLVH IV. Conclusion 7KH FRXUW KDV DOUHDG\ KHOG WKDW &RPPHUFH UHDVRQDEO\ IRXQG WKDW WKHUH ZHUH UHYLHZDEOHHQWULHVRI VXEVLGL]HG VXEMHFWPHUFKDQGLVHIURP(UERVDQGXULQJWKH325 See (UERVDQ,&,7DWBBB)6XSSGDW– ,QWKH5HPDQG5HVXOWV&RPPHUFH KDVUHDVRQDEO\GHWHUPLQHGWKDWNQRZOHGJHLVQRWUHOHYDQWLQDQRVKLSPHQWFHUWLILFDWLRQ DQDO\VLVXQGHU19 C.F.R. § G . $FFRUGLQJO\ WKHFRXUWVXVWDLQVWKH5HPDQG 5HVXOWV. -XGJPHQWZLOOEHHQWHUHGDFFRUGLQJO\ V/HR0*RUGRQ -XGJH/HR0*RUGRQ 'DWHG 6HSWHPEHU 20, 2019 1HZ